When cities dabble in the beer business

Across the county, city halls support -- and shun -- fast-fermenting industry

Two years ago, Russ Gibbon learned that a San Diego maker of brewers’ yeast planned a major expansion. As a beer drinker, he was mildly interested.

As the City of San Diego’s business development manager, he was ecstatic.

“If White Labs plans to triple in size,” Gibbon calculated, “that means White Labs is banking on the idea that microbrewing is going to triple in size. We need to grab as much of that as we can.”

Since then, Gibbon has become an ardent wooer of breweries. To bring them to San Diego, he’s expedited permits, offered zoning advice, made loans — in other words, treated them like valuable businesses.

Few regions in the United States are more associated with craft brewing than San Diego County. Our beer scene, led by 60-odd local breweries, has been hailed by Food & Wine and The New York Times.

But different city halls have responded to this ferment in different ways. Some, like San Diego and Vista, aggressively pursue this industry. At least one city, El Cajon, dabbled in these same malty waters before an embarrassing setback scuttled those efforts. And even in “beer-friendly” cities, some question the wisdom of encouraging this industry.

“We’d hear ‘The mayor is against medical marijuana but alcohol is just fine!’ We expect that,” Gibbon said. “But if you support a controversial industry, you get a lot of credit from the people who are being regulated.”

In the woods

If this business is controversial, it is also popular. In San Marcos last year, for example, Lost Abbey’s production grew 40 percent, from about 10,000 to 14,000 barrels. “We’re going to try to hold it to 20 percent next year,” said brewmaster Tomme Arthur, “so we don’t run out of space in our current brewery.”

Such growth impresses economic development directors, municipal employees who strive to attract all manner of prosperous businesses to their cities. Breweries can play a valuable, bubbly part in a locale’s economic life but not, officials insist, a privileged one.

“Our support for the brewers is similar to the support we provide other businesses,” said Kevin Ham, the City of Vista’s economic development director. “The help they’ve received is the same sort of help we offer other businesses.”

Fledgling brewers may be small merchants, but many are babes in the regulatory woods. San Diego’s Gibbon has helped brewers analyze building permits, assess sewage needs, help win approval for re-striped parking lots. In 2011, he untangled a problem for Ballast Point, which wanted to expand its Scripps Ranch tasting room. San Diego requires that any room larger than 750 square feet have an overhead sprinkler system. The brewery lacked one, and installing a system would have run tens of thousands of dollars

Gibbon’s solution: build two adjoining tasting rooms. As each was smaller than 750 square feet and had its own exit, no sprinklers were required.

“These are the kinds of things we do,” Gibbon said.

Gibbon reported to Jerry Sanders, an ale-to-the-chief kind of guy who just concluded his term as San Diego’s mayor. Mayor Bob Filner, Sanders’ successor, has pledged continued support for the industry.

Vista takes a similarly welcoming approach, as Daniel Love found when starting Mother Earth Brew in 2008. “From the inception,” Love said, “they have gone out of their way to build a relationship with me and not put up a lot of roadblocks.”

Breweries are often found in industrial areas. Since most operate tasting rooms, food trucks visit breweries so customers can drink and dine. The city, though, forbids food trucks from parking in one spot for more than half an hour.

“Of course,” Ham said, “we’d like to make sure people have food if they are going to be drinking beer.”

Vista revised its rule. Food trucks are now welcome outside breweries for unlimited periods of time.

Real money

Vista offers support, not cash. San Diego, though, has proposed “bridge loans” for two cash-poor breweries, Rough Draft and Hess. The city loaned the former $150,000 and offered the latter $250,000.

“These are the same sort of loans we’ve made to coffee shops, research and development companies, lots of different places,” Gibbon said.

Approved by a committee of bankers, the loans had interest rates that were slightly higher than those found in the private sector. As Gibbon noted, “There is always risk in putting real money into a project.”

For example: When El Cajon Brewing Company opened in October 2011, the City of El Cajon had invested $645,000 in the project.

A year later, the brewery restaurant filed for chapter 11 bankruptcy protection. The place remains open and officials say it is making loan payments, but the city’s interest in brewing has gone flat.

“It’s an interesting concept for economic development, to brand your city as a place for beers,” said Melissa Ayres, the City of El Cajon’s community development director. “But it’s not something we’re pursuing at this time.”

Among San Diego County’s brewers, word of the El Cajon brewhaha spread faster than a Silver Bullet.

“It’s a tight group,” said Gibbon. “Every time we do something wrong — or something right — they all know about it. Dealing with the brewers is like being on Monday Night Football.”